Tennessee criminalizes crypto ATMs; operators face misdemeanor

On April 13, 2026, Governor Bill Lee signed House Bill 2505, making it illegal in Tennessee to operate kiosks that convert cash into cryptocurrencies. The law classifies operator violations as Class A misdemeanors and requires any machine that sells crypto for cash to be deactivated by July 1.

Sponsors Jay Reedy and House Speaker Cameron Sexton argued the kiosks have been used in fraud schemes. Lawmakers pointed to cases in which older adults were coerced into depositing cash at ATMs that immediately converted funds into digital assets, transactions that victims generally cannot reverse.

The FBI’s 2025 annual report shows U.S. losses from cryptocurrency ATM scams totaled $333 million, with about $240 million occurring in the first half of 2025. Federal investigators say scammers often impersonate law enforcement or threaten legal consequences to get victims to deposit cash that is then converted into digital currency.

In Minnesota, lawmakers are pursuing an alternative. Senate File 3868 would allow virtual currency kiosks to keep operating under new consumer protections. The proposal would require operators to provide detailed risk disclosures, limit new customers to $2,000 in daily transactions, and reimburse verified fraud victims within 72 hours.

Industry groups argue that a ban could reduce financial access for people without traditional bank accounts. More than 85 companies are working to expand in-person crypto payment options, and proponents say kiosks are one way to onboard unbanked or underbanked consumers.

State responses to crypto kiosks now vary across the U.S. Tennessee’s law puts operators and businesses that host the machines at legal risk if they do not disable cash-to-crypto services by the July deadline. In Minnesota, operators would need to adopt stronger disclosures, transaction limits and fast reimbursement procedures if the proposed law is enacted.